Dynamicmonetary–fiscalinteractionsandtheroleof monetary conservatism

Assumingthatmacroeconomicpoliciesaredirectedbydistinctmonetaryandfiscal policymakerswhocannotcommittofutureactions,wereassesstheimplicationsof monetaryconservatismandfiscalimpatienceinasettingwithnominalgovernment debt.Forenvironmentswhereanon-negativesteadystatelevelofgovernmentdebt (assets)emergesintheabsenceofconservatismandimpatience,monetaryconserva- tism inducesaccumulationofahigherstockofliabilities(assets)andhasadverse (positive)welfareimplications.Thisresultobtainsirrespectivelyofthedegreeoffiscal impatienceandquestionstheunambiguousdesirabilityofmonetaryconservatism traditionallyfoundintheliterature